Latest research has shown that Nigeria spends about $13 billion (about N1.95 trillion) every year to provide electricity from generators, President Goodluck Jonathan retreated this yesterday in Abuja.
President Jonathan, who was speaking at the presidential retreat for power investors at the presidential villa, observed that even at this rate, less than half the population of the country has access to electricity.
“With a population of more than 140 million people, and as the seventh largest deposits of natural gas, a major fuel for power in the world, we (Nigerians) are ready for business,” the president declared.
Reiterating that Nigeria requires just about $10 billion (N1.5 trillion) per year in investment over the next few years to develop her power generation, distribution, and transmission capacities, the president said the retreat was to gain a better understanding of the investor’s concerns, as well as gain insights from their experiences in other markets “so that we can build a power supply industry that works for all and grows as fast as possible.”
He lamented that, “Generating power from generators adds more than 40 percent to the cost of goods and services in Nigeria, and this we can ill-afford.
Our mission, therefore, is for Nigeria to reach power reliability and sustainability within the shortest possible time so as to catalyze the much needed development.
“We know what is at stake, hence, the creation of the Presidential Action Committee on Power (PACP), which has finally birthed the roadmap for the reforms.”
Mr. Jonathan said his administration is determined “to implement the reform of Nigeria’s power sector in a way that Nigerians shall be proud of. We are determined to attract high quality investors with the record that ensures they will bring world class expertise and the industry’s best practices to our evolving power supply industry.”
Following this, he said the federal government is now looking for companies that can efficiently and rapidly expand services to undeserved parts of the country, adding that in a country with tens of millions of potential new power consumers, “We need firms that can grow quickly. Our national interest dictates that we encourage investors who are willing to stand with us for the long term, not those without the requisite pedigree in the sector.”
He said a recent opinion poll sponsored by the World Bank confirmed that Nigerians are willing to pay cost reflective tariffs for electricity, due to the fact that even some of the poorest citizens, including artisans and small business people, spend considerable amounts on petrol-powered generators.
With the support of Nigerians, the president said his administration is committed to transforming decades of paralysing government monopoly into private sector efficiency.
“All we need to ensure its abundant supply is the investment transparency and efficiency management. We are determined to make the power sector reform fair to all concerned. In this reform, there will be no losers, and the Nigerian people, including workers, will be the beneficiaries.
“No one is in doubt that the biggest casualty of our epileptic power sector is our manufacturing sector and the jobs that could have been created for thousands and thousands of our citizens. The work of building a prosperous Nigeria cannot be done if our factories continue to run on generator,” Mr. Jonathan added.
He disclosed that the reforms allow investors to become involved under concessions or privatisation. From next year, the federal government will cease investment in power generation and distribution while planning to concession the management of the transmission company of Nigeria. Federal government will complete processes for already initiated hydro power projects, he added.
Minister of state for power, Nuhu Wye, said government has already calculated that about $10 billion per year needs to be invested throughout the power supply chain in order to achieve the relatively modest (by international capacity) target capacity of 40,000 mega watts (MW) by 2020.
Special adviser to the president on power, Barth Nnaji , said the Central Bank of Nigeria (CBN) has established a N300 billion intervention fund that can be accessed by prospective investors in the power sector to help in the private sector development of the sector.
He added that with the unbundling of Power Holding Company of Nigeria (PHCN), establishment of Nigerian Electricity Regulatory Commission (NERC), and the launch of the roadmap to power sector reform, the coast is now clear for private sector involvement, assuring prospective investors of the introduction of full cost reflective tariffs.
The lack of power has led to the closure of several businesses while those still open for business struggle to stay afloat. On Wednesday, the executive secretary (West) of the Manufacturers Association of Nigeria (MAN), Wole Akeukekere, told the News Agency of Nigeria (NAN) that over 70 manufacturing firms had closed down in the southwest in the last one year.
He said the membership of the association in 2002 was 120, but has now shrunk to 50 in Oyo, Osun, Ondo, and Ekiti States that made up the zone.
According to him, “Things are not rosy at all; the situation is getting worse every day and the major challenge confronting the manufacturing sector is electricity. It is not possible to manufacture manually.”